LexisNexis® Emailage® PSD2 and 3DS2 White Paper


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Fight eCommerce Fraud Without Causing Undue Customer Friction

Detect and Prevent Risky Transactions in Card-Not-Present Transactions

reduce friction and fraud using email
eCommerce is rapidly growing around the world. And the preferred method of payment for goods and services sold online is with payment cards. While convenient for customers, eCommerce transactions put merchants at increased risk for fraud, especially in Card-Not-Present (CNP) transactions, when the merchant, payment card and cardholder are not in the same location. 

What was already a complex payments ecosystem has been made even more complicated by regulations in recent years including:
  • Payment Services Directive 2 (PSD2)–An EU directive administered by the European Commission, it was designed to regulate payment services and payment service providers throughout the European Union and European Economic Area. 
  • Strong Customer Authentication (SCA)–This European regulatory requirement obligates merchants to build additional authentication steps into their checkout flow.
  • 3-D Secure 2 (3DS2)–Apart from meeting the Strong Customer Authentication (SCA) compliance under PSD2, 3DS2 improves the user experience on mobile devices because it’s fully compatible with mobile wallet applications and in-app transactions.

These regulations call for stringent authentication that can require customers to provide more information, adding steps at checkout. Merchants and card issuers want to manage fraud risk and know they could be fined for noncompliance. At the same time, they are hesitant to implement any measures that potentially creates friction and frustration for customers. 

Risk Scoring of Email Addresses

One way to assess risk in payments that can improve the customer experience is by using email addresses. LexisNexis® Emailage® provides a predictive risk score based on machine-learning algorithms combined with a cross-industry and cross-sector consortium database. It also employs the power of network reporting.

Dynamic data from a customer’s email address, rather than static data such as a Social Security number or physical address, can better identify customers. It’s a highly predictive global fraud indicator. Furthermore, email addresses are not classified as Personally Identifiable Information (PII). Most people feel more comfortable providing an email address than other personal information.

Merchants and card issuers can use Emailage to manage their unique risk environment, custom calibrating their security to fit their needs or the specific transaction. 

This technology increases authorization speed, decreasing customer friction while also meeting stringent customer authentication regulations and minimizing the risk of fraud.

Fraud Prevention vs Customer Experience

Card issuers and eCommerce businesses are faced with the challenge of balancing customer friction with fraud prevention. Most customers understand that some verification requirements are necessary to protect their information and the merchant’s business. 

The advent of 3DS2 globally, PSD2 in the EU, and technology like Emailage that uses customer email addresses as fraud factors is helping to reduce fraud. While customers may experience some additional friction, it is usually an amount that they consider to be acceptable. Speedier transactions with fewer hurdles to clear make customers less likely to abandon their order and provide a more positive overall experience. 

Want to know more? Request our white paper, “Card Issuers and CNP Payments: reducing friction and fraud using email as a tool.”

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